US private sector adds more jobs than expected in October - ADP

Private sector employment in the US rose more than expected in October, according to figures released on Wednesday by ADP.

Employers added 125,000 jobs this month versus expectations of a 110,000 increase. Meanwhile, September's figure was revised down to 93,000 from 135,000.

Small businesses with fewer than 50 employees added 17,000 jobs, while medium-sized businesses with between 50 and 499 employees created an additional 64,00 jobs. Large businesses with 500 or more employees recruited an extra 44,000 people.

The goods-producing sector lost 13,000 jobs, while the service sector added 138,000 jobs, the bulk of which came from education/health services, which saw 41,000 jobs added.

Mark Zandi, chief economist at Moody’s Analytics, said: "Job growth has throttled way back over the past year. The job slowdown is most pronounced at manufacturers and small companies. If hiring weakens any further, unemployment will begin to rise."

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said: "While job growth continues to soften, there are certain segments of the labour market that remain strong. The goods producing sector showed weakness; however, the healthcare industry and midsized companies had solid gains."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the revision to the previous month's data is "just part of the back-fitting of ADP to the official data; it does not necessarily say anything about likely revision to the official September numbers".

"ADP likely will overstate the official private payroll number on Friday because it doesn’t account for the hit from the GM strike, which will subtract about 50K. But 125K is about the middle of the recent range of ADP numbers, a clear step down from the near-200K trend in 2018 and the early part of this year.

"We expect a further slowing, given the weakness of an array of leading payroll indicators since the spring breakdown of the trade talks with China and the subsequent increases in tariffs. The trend in job growth appears to be headed for 50K or so early next year. More immediately, we’re sticking to our 70K forecast for Friday’s official payroll number."